Gold Climbs to Six-Month High as Ukraine to China Spurs Demand
London (Mar 13) Gold advanced to the highest level in almost six months in London as tension between Ukraine and Russia and concern about slowing Chinese economic growth increased demand for a store of value.
The U.S. pressed Russia to cancel or postpone the March 16 referendum on Crimea joining Russia or at least agree not to implement any annexation vote as President Barack Obama met at the White House yesterday with Ukrainian interim Prime Minister Arseniy Yatsenyuk. Obama and U.S. allies in Europe are ratcheting up the threat of sanctions if Putin doesn’t take steps to defuse the situation.
Bullion advanced 14 percent this year, rebounding from the biggest annual drop since 1981, as concern economic growth in the U.S. and China is slowing and the crisis in Ukraine spurred demand for a haven. China’s retail sales, industrial output and investment last month trailed estimates, data showed today.
“It’s the situation in Ukraine that is the driving force behind gold,” Peter Fertig, the owner of Quantitative Commodity Research Ltd. in Hainburg, Germany, said today by phone. “The weakness in the Chinese economy is also a reason why investors are now, to some extent, putting money back into gold.”
Bullion for immediate delivery rose 0.5 percent to $1,373.54 an ounce by 9 a.m. in London. It reached $1,375.21, the highest since Sept. 19. Gold for April delivery added 0.2 percent to $1,373.90 on the Comex in New York, where futures trading volume was 66 percent above the average for the past 100 days for this time of day, data compiled by Bloomberg showed.
Ukraine Tension
The standoff has boiled over into the biggest confrontation between Russia and the West since the end of the Cold War. The U.S. and other members of the Group of Seven countries said in a statement yesterday that Russian annexation of Crimea “could have grave implications.”
“Gold should be supported as long as the situation in Ukraine remains uncertain,” said Zhu Siquan, an analyst at GF Futures Co., a unit of the Guangzhou-based company that bought Natixis Commodity Markets Ltd. “Technically, gold is starting to look a bit overbought.”
The metal’s 14-day relative strength index was at 70.6, above a level of 70 that signals to some who study technical charts that prices may be set to decline. Holdings in gold- backed exchange-traded products fell 1.9 metric tons yesterday, the first drop in a week, data compiled by Bloomberg show.
Silver for immediate delivery rose 0.5 percent to $21.4182 an ounce. Platinum added 0.1 percent to $1,476.81 an ounce. Palladium increased 0.2 percent to $777.75 an ounce.
European Union foreign ministers are prepared to draft a series of punitive measures against Russia including asset freezes and visa curbs at the beginning of next week, German Chancellor Angela Merkel said in Warsaw. Russia is the biggest palladium miner.
Production losses at the world’s largest platinum companies caused by a seven-week strike yesterday eclipsed those from stoppages in 2012 as talks over pay with the South African union leading the walkout remain deadlocked. South Africa is the largest producer of platinum and second-biggest for palladium.
Source: m.bisnis
